Any business facing growth challenges suffers from one of two situations. They either are unable to effectively produce the work required with the current resources (Bandwidth) or they do not have the right resources to meet demand goals (Capacity). In some cases it might be both causing the issue while in others the owner may not know which is the problem.
All too often the businesses I see have a Bandwidth problem. Everyone is working hard at getting things done and there’s no ability to produce more. But wait; isn’t that a situation where you are lacking the resources? Usually not. Most business owners are use to doing things a certain way. As sales grow, they keep the same processes in place, or as they add steps they put them together like a patchwork quilt fitting things in where they can to make them work. As this continues the business and its people become inefficient.
Bandwidth is also a product of an overactive business owner. Face it, when you started your company you were the master of all you surveyed. Everything went through you. Fast forward. Now you have employees and they are tasked with the activities you once did and they never seem to do things quite the same way as you did. Over time the owner’s need to approve every decision and monitor every action creating an unnecessary burden on the flow of work. The owner is now in a trap. They become the oracle and are required to have final say which makes interruptions commonplace and the ability to leave work behind nearly impossible. More than one leader has achieved burnout this way.
Capacity is a different issue. When a business suffers from capacity they lack the resources necessary to continue growth. The key factors for this are a lack of people and/or money. As the business grows the workload piles up. Eventually you reach a point where no more work can be added because people are doing more than they can realistically handle. In the beginning money often isn’t the root cause of this problem. The owner is unwilling to invest in more people because they would be under producing. In other words, the volume is more than the current staff can handle but not enough to keep the new hires busy full time. Larger companies can absorb this inefficiency but a small business owner might be afraid that the work will never come and they won’t be able to afford to keep the new hire on. This tends to become a self-fulfilling prophecy. Fear of hiring hinders growth and the business stalls.
Successful business owners figure out how to bridge the gaps between bandwidth, capacity and growth. Here’s what you need to implement to keep your sales trending up:
- Plan – Growth for growth’s sake might seem wonderful. I mean what business wouldn’t like their sales to continually grow by 20%, 50%, or 100% per year? Over time that type of growth becomes unsustainable. Culture erodes, quality is sacrificed and people are poorly trained. Plan your success. What do you need to do to sustain solid growth year after year? Be proactive.
- Systems – Sustainable growth is possible when you constantly review and implement systems that allow you to maintain consistency. This also helps with training. New employees can be brought up to speed much quicker when tools are in place to ensure things are done similarly. The key is to continually update the systems you have. Over time even the best systems become bogged down with changes. Always challenge your status quo.
- Empower – Business owners need to understand why being the smartest guy in the room is a business killer. It prevents better ideas from happening. Your team is underdeveloped and becomes highly dependent on you to make every decision, which also leads to higher turnover and hiring challenges. Put your people in position to do the job you hired them to do. Know what you need to give input on and what decisions others can make. Surprise, your involvement should be less than you think. Avoid letting your fear stop you from allowing people to grow. Mistakes will happen and there are ways to minimize their impact without eliminating autonomy.
- Invest – You WILL need to spend money before you can fully realize your investment. On average, people should be kept somewhere between 75-80% work capacity. Over 80% starts stressing the system. By 90% more mistakes happen. Once you reach 100% or greater the negative effects to sales and service are evident. This means you need to hire people earlier than you would like. Remember, the best training happens when there is time to coach not when it’s trial by fire.
Taking these four steps will get you well on your way to creating long-term sustained growth. Did you know we help business owners like you fix your bandwidth and capacity issues. Our approach to systems, process, and leadership helps companies grow sustainably while creating greater work/life balance. If you have questions or need more help, please feel free to reach out at invisionbusinessdevelopment.com or call 800-795-9611, and get the tools you need to increase revenue and profits!